Lori's Story

Lori is an engineer looking to join the Financial Independence Retire Early (FIRE) movement in her 50’s. Lori is in her 40’s, has done well with her finances by saving throughout her career and is well-positioned for a standard retirement in her 60’s.

In order to meet Lori’s goal of financial independence in her 50’s, we discussed how she would need to accelerate her savings to build up her nest egg. The challenge for her is to not sacrifice too much of her current lifestyle while meeting the savings goals needed for early retirement. The planning process began by analyzing her current budget and identifying where cuts could be made that would not be too detrimental. Lori identified that travel was very important to her but that she could reduce some of her shopping expenses in order to provide additional funds for savings. 

To further improve her plan, we also identified that incorporating a commission-free annuity as a component of her portfolio could reduce risk, improve plan performance and could provide financial independence 2 years earlier than without the annuity. Annuities have become much more attractive recently with rising interest rates and can provide a valuable component of a retirement plan that otherwise relies solely on investment assets. Therefore, we assisted Lori in helping her purchase a commission-free annuity through an insurance broker. 

Lori’s savings strategy has been tailored to minimize lifetime tax payments with her savings being distributed amongst taxable investments, IRA/401k accounts and Roth accounts. Another important aspect to meet her FIRE goal is tax-efficient asset allocation amongst her various accounts, where each specific security is located within an account considering the tax characteristics. Tax-efficient allocation and investment management will improve her after-tax portfolio performance and will speed up her journey to financial independence. 

Lori is currently on track to retire at 56 and her financial plan is reviewed annually to verify progress and adjusted as needed/desired.  When life changes occur (as they always do), her financial plan is also reviewed and sometimes modified in an effort to achieve an earlier retirement date. 

Note: Case studies are fictitious and are not the experience of actual clients.  Studies are presented as an example of services that can be expected when working with Personal Prosperity.